Toyota Motor Corp announced on Tuesday both the president and chairperson of its Daihatsu Motor unit would step down in a leadership reshuffle as it tries to repair the damage from a scandal over cheating on vehicle safety tests.
The troubles at Daihatsu surfaced after a whistleblower reported the cheating. A third-party review found violations, such as carrying out tests on just one side of a car when both sides had to be tested, that had persisted for decades.
The departures are among the most drastic changes Daihatsu has made so far, as Toyota seeks to return the brand to its roots as one of Japan's most iconic compact carmakers.
The world's top-selling automaker said it faces a potential hit to its reputation from the safety certification lapses at Daihatsu, as well as separate governance issues at truck maker Hino Motors and affiliate Toyota Industries.
The scandals at the three companies triggered a rare apology from Toyota Chairperson Akio Toyoda last month.
Toyota's chief executive officer for the Latin America and Caribbean region, Masahiro Inoue, will replace Soichiro Okudaira as Daihatsu's president effective March 1, Toyota Chief Executive Koji Sato told reporters in Tokyo.
The outgoing Okudaira had worked at Toyota for nearly four decades before becoming president of Daihatsu in 2017, a year after it became a wholly owned Toyota subsidiary.
Daihatsu's Chairperson Sunao Matsubayashi also resigned and will not be replaced, the company said, while two other directors left the board but kept their positions at the company.
Masanori Kuwata, now at Lexus International Co., Toyota Motor Corp.'s luxury brand, becomes Daihatsu's executive vice president. Keiko Yanagi, a deputy chief officer at Toyota, was named a director at Daihatsu.
Inoue apologized to Daihatsu's customers, suppliers and dealers, saying he knows how to be a good listener to win people’s trust because of his decades of working overseas.
"We will make our hearts one and aim for a new start,” Inoue said.
Sato told reporters that the organizational change at Daihatsu was not carried out as a punishment for the outgoing executives.
In volume terms, Daihatsu accounted for 7% of Toyota's total group sales of 11.2 million vehicles in 2023, including those of the luxury Lexus brand and Hino Motors.
Inoue said a business plan will be disclosed in April, including a new managerial direction.
The Japanese government has ordered production halted on an array of Daihatsu models until tests can be carried out properly and approved. The companies said some production has already resumed but work on other models will take time.
No major accidents have been reported in connection with the cheating, but the news has raised serious questions about oversight at Daihatsu and its corporate parent Toyota.
Daihatsu has said its workers were under heavy pressure to meet tight deadlines. Management neglected to address problems on the factory floor and the causes of the cheating were complex, Sato said.
Daihatsu has recently handed an investigation of its wrongdoing to the Japanese government. Daihatsu, which has a 100-year history and employs 40,000 people, is known for small models popular in Japan and the rest of Asia.
Given the misconduct over the safety test certification applications, Daihatsu also will be removed from a commercial vehicle partnership known as the Commercial Japan Partnership Technologies (CJPT), the automaker said in a separate statement.
The partnership was established in April 2021 by Toyota, Hino and Isuzu Motors to facilitate technology development for commercial vehicles. Suzuki Motor and Daihatsu joined in July of the same year.
Daihatsu products are known as "kokuminsha” in Japan, or "the people’s cars,” often used by small businesses for deliveries and transport. Sato said that embodied the spirit of Daihatsu.
He said Daihatsu will fix its corporate culture, management and "monozukuri,” or "the act of making things,” long the basis of the Toyota Way of Manufacturing that empowers individual workers.
"We are ready to return to our roots to recreate Daihatsu,” he said.
